Virtu Threatens to Exit N.Y. If ‘Foolish’ Finance Tax Passed
(Bloomberg) -- Virtu Financial Inc. is ready to pack its bags if New York lawmakers implement a financial-transaction tax.
The electronic market maker joined the New York Stock Exchange in threatening to leave the state if Democrats enact a surcharge on stock trades to help close a projected four-year revenue loss, estimated at $39 billion. Lawmakers argue that reinstating the tax would raise about $13 billion annually, helping to avert cuts to services such as education and health care during the pandemic.
A financial-tax proposal in New Jersey has also been met with strong opposition from the finance industry.
“I understand the pressures of these governments around their deficits,” Virtu Chief Executive Officer Doug Cifu said Thursday on the company’s fourth-quarter earnings call. But “the notion of a transaction tax in New York is -- I’ll use the word foolish. Because I know what we would do. I would shut this office.”
Virtu has about 400 employees based at its New York City headquarters, and is looking for a cheaper office that will shrink its real estate footprint there by 75%. The company is also seeking sunnier climes by opening a hub in Florida. It’s already built up its presence in Austin, Texas -- a state that’s considering legislation to ban financial-transaction taxes to attract stock exchanges and financial firms, said Cifu, citing discussions with Texas Governor Greg Abbott.
Organizations representing the finance industry have also blasted the New York proposal. Yet state Senator James Sanders and Assembly member Phil Steck said concerns about financial companies leaving New York were unfounded because it would cost billions to move and “makes no economic sense.”
Wall Street says otherwise.
“We would just leave the state of New York and we would never pay a penny of the New York state transaction tax,” Cifu said.
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